In a context of continuous evolution of the environment both internally and externally, the change is being offered more as a necessity other than a luxury or a choice. Indeed, when the environment changes the business which deny making essential modifications both in terms of attitudes and behaviours places herself at risk on inadequacy of its context: which means that it is probable to be in phase shift with the present world another by the development of competition that inevitably tends to condemn businesses less adapted.

That’s why companies should stay vigilant because there are increasingly external factors able to influence their futures. One of the functions of the Human Resource Management is to be collected and be aware of changes in the environment of the company and their consequences for this one. The environment being essentially in perpetual motion and constant advancement, the prediction and recognition of changes should allow companies to acclimatize and transform themselves adequately.

“Don’t deal with change its inevitability expose yourself to disappear “P. WATZLAWICK (1980)

Firstly we will analyse which are the external environmental factors able to influence a business or a company. Secondly we will criticize the role of Human Resources Managers in this environment and finally analyze the practices that could help a company to gain sustainable advantages to its competitors.

EXTERNAL FACTORS AFFECTING A BUSINESS

 There are numerous factors that affect the Company’s business and the results of its operations, some of which are beyond the control of the Company. The following is a description of some of the significant factors that may cause the actual results of the Company’s operations in future periods to differ materially from those actually expected.

Pearce and Robinson (2002) talk about four external forces Economic, Political, Social and Technological. Each external factors influence business strategy. While these descriptions are generally unquestionable, they may give the false effect that the constituents and factors are easily recognised, mutually exclusive, and equally applicable in all positions (Pearce & Robinson, 1985, p 121). In fact, forces in the external environment are so dynamic and interactive that the influence of any single element cannot be disassociated from the impact of other elements.

Economic factor

Businesses require making money to continue to exist. The economy has an important influence on the viability of a business strategy. For example in house market, because of the recession, prices of houses are now declining in London.

So, it’s an understatement to say that the present recession is hurting business owners. To remediate this situation the successful businessman visualizes the external factors affecting the business, anticipating the prospective market situations and makes suitable to get the maximum with minimize cost.

Political factor

The present political climate can influence the kinds of legislation that can affect tariffs on goods and a service which means political factors can be restrictive or beneficial.

Restrictive components are those factors that limit profits; such as tax laws, minimum wage legislation or pollution laws as cited in Pearce and Robinson, (1985). Governmental influences are particular interest for those enterprises that operate in foreign countries.

Social factor

The social dimension of a nation determines the value scheme of the society which affects the functioning of the business: in others words, changes in the structure of the population, and in consumer lifestyles and behaviours.

CERTO (1997, p. 51) defines social responsibility as a managerial responsibility to take actions that protects and improves both the welfare of society and the interests of the organization.  

Technological factor

The development of new technology has directly influenced the function of the organization. Technology factors are the scientific advances, which influence the competitive position of the enterprise. Maintaining awareness of new technologies decreases the probability of becoming obsolete and help to promote innovations.

In summary, the external environment of a business plays a principal role in determining the opportunities that a firm faces. Consequently, the Human Resources Managers have a important role to play to be sure that the company take into consideration the external environmental factors.

ROLE OF HUMAN RESOURCES MANAGERS

Human Resource Management is a strategic and logical approach to the management of an organization most valued assets: the employees who individually and collectively contribute to the achievement of its objective. Furthermore, good Human Resource Management must be aware of any change or external environmental factor which can influence the company.

Human Resource Management aims to help the organization to achieve success through people. As Ulrich Lake (1990) remark “HRM systems can be the source of organizational capabilities that allow firms to learn and capitalize on new opportunities ” .

However, according to STOREY (1989) sometimes the decisions made by the Human Resource Management to face the external factors are both hard and soft.

The SOFT roles of Human Resource Management

Ulrich 1998 propose that environmental and contextual changes present some challenges to organizations; which means that Human Resource has to be involved in assisting to construct new capabilities. These comprise:

Globalization which requires HRM to move people, ideas and information’s around the world to meet local needs.

Profitability through growth : the drive for revenue to grow means that HRM must be creative and this means encouraging the free flow of information and shared learning among employees

Organizational and individual learning: systematically developing organizational and individual learning processes; providing employees with learning opportunities, including e-learning, to develop their capabilities, realize their potential for them to be totally conscious of all the external environmental factors.

Technology: the challenge is to make technology a viable, productive and update part of the work setting.

HARD roles of Human Resource Management

The hard approach about Human Resource Management emphasizes the quantitative, calculative and business-strategic aspects of organising the headcount resources.

It adopts a business-oriented belief which focuses on the need to manage people in ways to obtain added value from them. Also is the mistake of taking bad decisions which are not in similarities with the exterior changes and movements.

Overall it’s important to a company to have a good Human Resource Management which is aware of all the changes that can be happen in her external environment. To clearly know them all will help Human Resource Managers to apply some HR practices to gain sustainable competitive advantages.

HUMAN RESOURCE MANAGEMENT FOR SUSTAINABLE COMPETITIVE ADVANTAGE

The role of the Human Resource Manager is evolving with the change in competitive market environment and the fact that Human Resource Management must play a more strategic role in the success of an organization. Human Resource practitioners must have the capacity to identify business opportunities, and to understand how their HUMAN RESOURCE roles can help to differentiate the company to the others and finally achieve the company’s business objectives.

With the boost of the competition, in small or big areas, organizations should become more adaptable, resilient, agile and customer -focused to succeed. In order to do well, Human Resource must be able to influence key decisions and policies.

The question then is to know what firms should really do to maintain and optimize their situation in this environment. Should them focus on the financial situation, technological ,or human resources plan?

To answer this question we would first compares researchers’ conclusions:

Coff 1994 argues that human assets are a key source of sustainable advantage because of causal ambiguity and systematic information making them inimitable.

Guest 1990 says that if management trust their workers and give them challenging assignments, workers in return will respond with high motivation, high commitment and high performance.

Gratton 1997 identified six factors or success: the commitment of top management, the motivation and aspirations of recruits , the core capabilities of the management team , the team`s aspiration, its ability to build and maintain alliances and the integration of the business into a global network.

It means that sources of competitive advantage have shifted from financial resources to technology resources and now to human capital. Now that we know that employees are one of the sources of competitive advantage, what do we have to do to achieve competitive advantage through them? In other words, what are the human resources practices to gain sustainable competitive advantages?

According to the answer is simple and consist of two actions:

Cost Leadership Strategy: the primary focus of a cost leadership strategy is to accomplish reduced charges to competitors. Lowering costs lead to lowering prices, which can increase demand for products or services. This is the case of ASDA supermarket in London which believes to have a policy of prices more cheaply than all of their competitors. However if the product cannot be produced at a lower cost it also decreases earnings margins. To compete on cost, managers must address other costs and design a system that lowers the cost per unit of the product or service.

Differentiation Strategy: the primary focus of a differentiation strategy is creating uniqueness that the organizations goods and services are clearly distinguished from those of its competitors. In other words the focus is on creativity and innovation which have long been recognized as necessary for bringing the required change to obtain the competitive advantage. But SHULER AND AKSON 1987 have divided the differentiation strategy in 3 small groups:

Innovation strategy: the primary focus here is developing products different from those of competitors or offering something new and distinct. For example when the company APPLE introduced on January 9, 2007 the first iPhone.

Quality enhancement strategy: the aim is enhancing the product and means changing the processes of production in ways that require workers to be more involved and more flexible.

Cost reduction strategy: firms typically attempt to gain competitive advantage but being the lowest cost producer.

But for all this to be possible, HRM must be careful to choose the right people, in the right way, which means:

*employees with more competencies

*employees who have more ideas that are implemented

*employees with higher customer satisfaction, bonus rates and promotion rates

*employees who produce more return for every dollar of salary paid to them.

CONCLUSION

The role of the HR manager must follow the needs of the changing organization. Successful organizations are becoming more adaptable, resilient, quick to change directions, and customer-centred. The primary function of human resources today is to ensure the effective and efficient use of human talent to accomplish an organization goal and objectives. Using human resource as a competitive advantage means analysing what factors are necessary for the organization long term success.

SOURCES:

BOOKS

James Mannie Shuler, Understanding Organizations and Management Through Triangle Analysis and Performance Universal publisher, 2006.

 John Bratton, and Jeffrey Gold , Human Resource Management: Theory and Practice, Macmillan presss,1999

Michael Armstrong, A handbook of human resource management practice, Kogan Page Limited edition, 2007.

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